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N.J. Must Repay $271 Million For Rail Tunnel

The Federal Transit Administration has determined that New Jersey must repay the federal government the entire $271 million it spent on early design and engineering work for a New Jersey-New York train tunnel that Gov. Chris Christie scrapped.

U.S. Transportation Secretary Ray LaHood announced the final decision Friday in a letter to New Jersey's congressional delegation and in a 52-page report sent to the Christie administration from the FTA's Budget and Policy office. The Associated Press obtained copies of both documents.

Christie abandoned the project over what he said were escalating costs, then hired a high-powered Washington law firm to fight the debt. The administration has spent more than $800,000 in legal fees.

In the letter, LaHood calls Christie's decision to cancel the tunnel unfortunate. He says Christie and leaders at the state's mass transit agency willfully broke the contract for the tunnel.

LaHood says the cost range was known since 2008.

He said that he would not seek to withhold federal funds from other programs to recoup the debt because of the poor economic conditions facing the state.

"I am not pursuing these collection methods at this time in the hope that we and the state of New Jersey can develop a workable payment schedule that will result in the least harm to New Jersey residents,'" LaHood wrote in his letter to the delegation.

Sens. Frank Lautenberg and Robert Menendez, both Democrats, lamented the decision.

"We worked hard to get the parties to negotiate a fair resolution of this conflict," they said. "However the state's outside lawyers pursued an all or nothing approach, which brings substantial risk to New Jersey taxpayers.'"

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